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Unit II Strategy Formulation VALUE CHAIN ANALYSIS Business is seen as a chain of activities, departmental demarcations are ignored The

he chain of activities transforms input in to output that customers value. The customer value is derived from: Product differentiation Cost Timeliness in meeting customers needs

Divide companys activities in to specific business processes. Group these in to primary and support activities. The primary activities include: Inbound logistics Operations Outbound logistics Marketing and sales Services

PRIMARY ACTVITIES Inbound logistics. Fuel, energy, raw materials, parts/components, merchandise and consumable items from the vendors. Receiving , storing and disseminating inputs from suppliers, inspection and inventory management Operations. Converting input in to final products- production, assembly, packaging maintenance, quality assurance, environmental protection Outbound logistics. Distributing, warehousing, order processing, order picking, packing shipping delivery vehicle operation. Marketing and sales. Sales force effort, advertising and promotion, market research and planning, dealer distributor support Service. Assistance to buyer( installation, spare parts delivery, maintenance and repair, technical assistance, buyers enquiry and complaints

SUPPORT ACTIVITIES General Administration. Accounting and finance, legal and regulatory affairs, safety and security, MIS and other overhead functions HRM. Development of knowledge based skills, recruitment, compensation management, training and development Research, technology and systems development. Equipment design, software development, telecommunication systems, CAD/CAM Procurement. Supplies, services, outsourcing ALLOCATE COSTS Each activity in the value chain incurs cost and ties up time and assets Traditional cost accounting of purchase department, would include: Wages and salaries Employees benefits Supplies Travel Depreciation Miscellaneous operating expenses Evaluate suppliers capabilities Process purchase orders Expedite suppliers delivery Expedite internal processing Check quality of items purchased Resolve problems

Activity based cost accountancy(purchase department) would include

DIFFICULTY IN ALLOCATING COSTS The existing financial management and accounting systems in most firms is not geared to provide activity based costs. This can also create redundant work Financial reporting requirements do not match with the activity based costs accounting IDENTIFY ACTIVITIES THAT DIFFERENTIATE THE FIRM Examining the value chain brings out several sources of differentiation advantage relative to competitors. The firm can concentrate on these sources of differentiation advantages to gain competitive advantages. Alternatively the firm can analyse the entire value chain. EXAMINING THE VALUE CHAIN Identify activities that are critical to customer satisfaction and market success Basic Mission Nature of value chain and the relative importance of activities within them vary by industry. Relative importance of value activities vary by companys position in broader value system that include the value chain of its upstream suppliers and downstream customers and partners providing products and services to the end users

Porters Five generic Strategies

1. Cost Leadership Strategies Reason for integration strategies is to gain low cost or best value leadership. Must be done in conjunction with differentiation. Need to perform value chain activities more efficiently than the competitors. Operating close to full capacities, changing product design Revamp the overall value chain activities. Securing new suppliers, relocating manufacturing facilities In vigorous cost competition Identical products supplies readily available Few ways to obtain product differentiation Same way for use of the product Low cost of switching from one product to another Large number of buyers has power to down prices. 2. Differentiation Strategies Successful differentiation greater product flexibility, compatibility, lower cost, improved services, less maintenance, greater convenience, more features etc. The risk in adopting differentiation can be customers do not perceive the differentiation as propagated and are not ready to pay higher prices. Then costs have to be lowered. When many ways available and customers value these factors When buyers needs and uses are diverse Few rival firms following the method Fast technological changes. 3. Focus Strategies Industry segment of sufficient size and has good growth potential Market penetration, market development offer good focus strategies When rival firms are not attempting the same Should be tried in conjunction with differentiation Niche target market and growing fast Industry leaders find it difficult expensive to customize/specialize.

4. Strategies for Turbulent and High Velocity Markets Some of the industries changing at an exceptionally fast pace. Tele communication, Internet based technologies, medical, biotechnology, pharmaceuticals, computer hardware software. The choices here are react, anticipate or lead

5. Strategies for Turbulent and High Velocity Markets React to Change. Defensive Anticipate change- Balanced. Lead the Change. Aggressive

Competitive Position- Concept of Stretch, Leverage and Fit;

Fit A function of Positioning Positioning can be : Variety based Needs based Access based Once a valuable positioning achieved the competitors will imitate. If the position is to be sustained must look at Inconsistencies Inflexibilities Limits of internal coordination A perfect fit in a competitive environment can only be sustained by constantly working on the value chain so that the most critical links are the strongest in the chain. A less efficient approach will leave a slack between the goals and achievement

Concept of Stretch The concept of stretch is based on aspiration - creating a chasm between ambition and resources. This is done by design. Every single step to the future is not predetermined Leadership cannot be entirely planned for neither does it occur in the absence of a clearly articulated and widely shared aspiration The gap between resources and aspiration is filled by leveraging the resources Strategy as Leverage This strategy is based on the concept of doing more with less. The American and European firms spend more on R&D as compared to the corresponding Japanese competitors. But the Japanese achieve more with less resources (GM Vs Honda, Phillips Vs Sony) This is the concept of leveraging the resources. The stretch goals can be achieved by leveraging the resources

GRAND STRATEGIES A master long term plan that provides basic direction for major actions directed towards achieving long term business objectives Also indicate a time period over which the long term objectives are to be achieved: A comprehensive general approach that guide a firms actions

THE GRAND STRATEGY: MATRIX FOR MAKING CHOICE This matrix is based on two evaluative dimension. These include competitive position and market growth. With competitive position on the X Axis and marked growth on the Y axis four quadrants emerge.

Quadrant 2 Market Development Market Penetration Product Development Horizontal integrations Divestiture Liquidation Quadrant 3 Retrenchment Related Diversification Un related diversification Divestiture Liquidation

Quadrant 1 Market Development Market Penetration Product Development All integrations Related Diversification Quadrant 4 Related Diversification Un related diversification Joint venture

QUARDRANT-1 Rapid growth, strong competitive advantage. When in possession of excessive resources should go for backward, forward and horizontal integration. If too heavily committed to single product then diversification should be the strategy. Can take risks aggressively when it is necessary. Never shift focus from established competitive advantages. QUARDRANT-2 Rapid growth weak competitive advantage. Must concentrate on finding reasons as to why the firm lacks the competitive advantage. Prefer horizontal integration. As a last resort divestiture or liquidation should be considered. Funds so acquired can be used to acquire other business or buy back stock QUARDRANT-3 Slow Market growth, weak competitive position. Must make some drastic changes quickly to avoid further decline and possible liquidation. Pursue extentive cost and asset reduction. Diversify Liquidate, divestiture. QUARDRANT-4 Slow market growth, strong competitive advantage. Since there is high cash flow level can launch diversified products . Can pursue joint venture.

GRAND STRATEGIES GRAND STRATEGIES 1. Concentrated Growth Resistant to technology (Risk) Resistance to Changes (Risk) Distinctive Inputs stable in price and quantity Stable markets Efficient production & distribution channels 2. Market Development Marketing present products often with only cosmetic modifications to customers in related market areas a. Additional geographic markets b. Attracting Other market segments Concentrated growth Market Development Product Development Turn around Divestiture Liquidation Bankruptcy Joint Venture Strategic Alliance Consortia Innovation Horizontal Integration Vertical Integration Concentric Diversification Conglomerate Diversification

3. Product Development: Substantially modified product to the same market (Brand, enhance product life cycle) 4. Innovation: Reap premium margin associated with creation of a customer acceptance service 5. Horizontal Integration: Growth through acquisition of similar firms 6. Vertical Integration: Acquire firms which supply inputs or new customers for output. 7. Concentric diversification operation of second business that benefits from access to the first firms Core Competencies. (Marketing, technology). 8. Conglomerate Diversification: to exploit promising investment opportunity (focus on profit pattern) 9. Divestiture: Sale of a firm or a major unit of firm as a going concern.

CORPORATE LEVEL STRATEGIES Directional- Growth , stability and retrenchment Stability- pause/ proceed with caution, no change, profit. Retrenchment- Turnaround, captive company, sell out divestment, bankruptcy liquidation

DIRECTIONAL STRATEGIES- GROWTH Concentration Vertical growth- forward, backward, transaction cost economy, full integration, taper integration, quasi integration, long term contracts Horizontal growth- horizontal integration, international entry Diversification Concentric(related), conglomerate ( unrelated) diversification . STABILITY STRATEGY Pause/ proceed with caution. Typically a temporary strategy adopted as time out till the environment become suitable or consolidate the gains No change. Decision to do nothing since no change in the situation ( opportunity, threat). Future expected to be an extension of the present. Profit. Artificially support profits when sales are declining.

RETRENCHMENT STRATEGIES Turnaround. Problems pervasive but not critical. Emphasis on improving operational performance Captive Company. Giving up independence and offer to be captive to the needs of one of the big customers. Sell out/ divestment. Bankruptcy/ liquidation STRATEGIES FOR COMPETING IN THE GLOBAL MARKETS Customize to suit local market or Standardized product Employ same competitive strategy in all countries or modify strategy country by country. Where to locate production, distribution and customer services. Transfer of resource strength and Capabilities from one country to another to ensure competitive advantage APPRAISAL PROCESS Gather, assimilate and evaluate information on firms operations. Identify Critical Success Factors. Prioritize Critical Success Factors List 10 to 20 factors in order of priority. Involve Maximum members- shared view. Coordinate for inter department relationship. Conduct financial ratio analysis ORGANIZATIONAL APPRAISAL The strategic advantage in terms of organizational capabilities depends on a number of organization related factors. Organizational resources. Organizational Behavior These create strengths and weaknesses Synergy Competencies Strategic advantages FACTORS OF ORGANIZATIONAL STRATEGIC ADVANTAGE Resources Behavior Strengths and weaknesses Synergy Competencies Capability Strategic and Competitive advantage STRENGTHS THAT SUPPORT FINANCIAL CAPABILITIES Ability to raise short-term capital & raise long term capital; debt-equity Corporate-level resources(multi business firm) Cost of capital relative to that of Industry and competitors Tax considerations Relations with owners, investors, and stockholders Leverage position; capacity to utilize alternative, financial strategies Cost of entry and barriers to entry Price-earnings ratio Working capital; flexibility of capital structure Effective cost control; ability to reduce cost financial size.

STRENGTHS THAT SUPPORT MARKETING CAPABILITIES Firms products-services: breadth of product line. Concentration of sales in a few products or to a few customers. Ability to gather needed information about markets . Market share or submarket shares Product-service mix and expansion potential: life cycle of key products; profit-sales balance in production service. Channels of distributions: number, coverage, and control Effective sales organization: knowledge of customer needs Internet Usage, Product-service image, reputation and quality Imaginativeness, efficiency, and effectiveness of sales promotion and advertisements. Pricing strategy and pricing flexibility After-sale service and follow-up. Goodwill- brand loyalty STRENGTHS THAT SUPPORT OPERATIONS CAPABILITIES Raw materials cost and availability, supplier relationships. Inventory control systems; inventory turnover Location of facilities, layout and utilization of facilities Economies of scale Technical efficiency of facilities and utilization of capacity Effectiveness of subcontracting use. Degree of vertical integration; value added and profit margin Efficiency and cost-benefit of equipment Effectiveness of operation control procedures: design, scheduling, purchasing, quality control, and efficiency Costs and technological competencies relative to those of industry and competitors. Research and development-technology-innovation patents, trademarks and similar legal protection. STRENGTHS THAT SUPPORT PERSONNEL CAPABILITIES Management personnel Employees skill and morale Labor relations costs compared with those of industry and competitors Efficiency and effectiveness of personnel policies. Effectiveness of incentives used to motivates performance Ability to level peaks and valleys of employment Employees turnover and absenteeism Specialized skills Experience STRENGTHS THAT SUPPORT INFORMATION MANAGEMNET CAPABILITIES Timeliness and accuracy of information about sales, operations , cash, and suppliers Relevance of information for tactical decisions Information to manage quality issues: customer service Ability of people to use the information that is provided. Linkages to suppliers and customers

STRENGTHS THAT SUPPORT GENERAL MANAGEMENT CAPABILITIES Organizational structure Firms image and prestige Firms record in achieving objectives Organization of communication systems Overall organizational control system(effectiveness and utilization) Organizational climate; organizational culture Use of systematic procedures and techniques in decision making Top-management skill, capabilities, and interest Strategic planning systems Intra-organizational synergy(multi-business firms) FINANCIAL RATIOS Liquidity Ratios Current Ratio The extent to which a firm can meet its short-term obligations Quick Ratio- The extent to which a firm can meet its short-term obligations without relying upon the sale of its inventories Leverage Ratios Debt-to-Total-Assets Ratio- The percentage of total funds that are provided by creditors Debt-to-Equity Ratio- The percentage of total funds provided by creditors versus by owners Long-termDebt-to-Equity Ratio- The balance between debt and equity in a firms long term capital structure Time-Interest-Earned Ratio- The extent to which earnings can decline without the firm becoming unable to meet its annual interest costs. Activity Ratios Inventory Turnover- Whether a firm holds excessive stocks of inventories and whether a firm is slowly selling its inventories compared to the industry average. Fixed Assets Turnover- Sales productivity and plant and equipment utilization Total Assets Turnover- Whether a firm is generating a sufficient volume of business for the size of its assets investment Accounts Receivable Turnover- The average length of time it takes a firm to collect credit sales (in percentage terms) Average Collection Period- The average length of time it takes a firm to collect on credit sales(in days) Profitability Ratios Gross Profit Margin- The total margin available to cover operating expenses and yield a profit Operating Profit Margin- Profitability without concern for taxes and interest. Net Profit Margin- After-tax profits per unit of sales Return on Total Assets-(ROA)- After-tax profit per dollar of assets; this ratio is also called return on investment(ROI) Return on Stockholders Equity(ROE)- After-tax profits per dollar of stockholders investment in the firm. Earnings per Share(EPS)- Earnings available to the owners of common stock Price- Earnings Ratio- Attractiveness of Firm on equity markets. Growth Ratios Sales- Firms growth rate in sales Net Income- Firms growth rate in profits Earnings per share- Firms growth rate in EPS Dividends Per Share- Firms growth rate in dividends per share

NON FINANCIAL QUANTITATIVE METHODS Aspects such as employees turnover, absenteeism, market ranking, rate of advertising recall, total cycle time of production, inventory units used per period, service call rate, number of patents, registered per period are some of the examples. These non- financial aspects at times become much more important GROWTH OF A FIRM Survival, Growth and profitability are primary concerns of a firm Growth orientation needs to be over long term The profits that are generated from operations are ultimate source of funds for growth Growth is multidimensional: profitability, number of markets served, variety of products and technologies NATURE OF GROWTH Growth can be through concentration ( vertical and horizontal integration) or through diversification ( concentric or conglomerate diversification) Related diversifications are considered to be better options than pure concentration strategies Relationship between Relatedness and performance. If a new business is very similar to that of the acquiring firm very little value is added to the corporation as compared to acquisition of new resources and capabilities in a different but similar business. Firms growing internally perform better than those which grow from external means ( acquisition, mergers, alliances A combination of internal and external growth can be adopted. While considering external growth through acquisitions a suitable candidate for take over: Must be relatively small Must be comparable in organizational culture Must be physically close to one of the affiliates MERGER Merger is transaction involving two corporations in which stock is exchanged but only one corporation survives Occurs between firms of similar size and is friendly Resulting firm derives the name from its composite firms ACQUISITION Purchase of a company that is completely absorbed as an operating subsidiary or division of the acquiring corporation. Generally between firms of different sizes can be friendly or hostile Hostile acquisitions are called takeovers MERGERS AND ACQUSITIONS Difference in merger and acquisition relates more to details of ownership, management control, and financial arrangements than to strategy and competitive advantage The resources, competencies, and competitive capabilities of the newly created enterprise end up much the same whether the combination is result of acquisition or merger. STRATEGIC OBJECTIVES OF MERGERS AND ACQUSITIONS Cost effective operations Expand geographic coverage Expand in to new product categories Access to technologies or other resources

STRATEGIC ALLIANCES It is a formal agreement between two or more separate companies joint contribution of resources, shared risks, shared control and mutual dependence Generally involve joint marketing, sales, distribution, production , design collaboration, joint research or technology development Relationship can be contractual or merely collaborative. Stops short of ownership and control. Factors for strategic alliance: Achievement of important objectives. Build , sustain core competence. Block a competitive threat Open up new market opportunities Mitigates significant risks Get in to critical country market Gain inside knowledge about unfamiliar markets and cultures through alliance with local partners Access valuable skills and competencies Establish stronger beachhead Master new technologies Open up broader opportunities CAPTURING THE BENEFITS OF STRATEGIC ALLIANCES Picking a good partner Being sensitive to cultural differences Alliance must benefit both sides Live up to respective commitments Structure the decision making so that action can be taken swiftly Managing the learning process and then adjusting the alliance agreement over time to fit new circumstances UNSTABLE AND DANGEROUS ALLIANCES Failure to respond to changing circumstances Arms length collaboration does not help in alliances Mostly alliances are short lived Alliance can reduce competitive disadvantage but rarely give competitive edge. RESTRUCTURING STRATEGY Involves divesting some businesses and acquiring others to change the companys line up Redesigning an organizational structure with the intent of emphasizing and enabling activities most critical to a firms strategy to function at maximum effectiveness. Too many businesses in slow growth, declining, low margin or otherwise un attractive industries Too many competitively weak businesses Excessive debt burden Ill chosen acquisition that have not lived up to expectations Emergence of new technologies Special circumstance when a very big acquisition is to be affected To find a strategic fit RESTRUCTURING STRATEGY (ORGANIZATIONAL ASPECTS) Redefine corporate HQ role from control to support and coordination Rigorous financial controls and reporting enable cost efficiency, resource deployment and autonomy across different units, flexible controls are conducive to responsiveness and innovations Concept of executive councils for all critical decisions The executive councils replace routine staff functions From checkers, inquisitors and authority figure to facilitators helper and supporters Balance control and differentiation ( example of coke and GE) Emphasis on a particular part of value chain depends on the type of business and mission

BUSINESS PROCESS REENGINEERING Fundamental rethinking and radical redesigning of a business process so that company can create value for the customer by eliminating barriers that create distance between employees and customers Reduces fragmentations , and cuts down overheads Types of Benchmarking Performance Benchmarking Process Benchmarking Strategic Benchmarking Internal Benchmarking: Competitive Benchmarking Functional Benchmarking Generic Benchmarking

Unit IV Strategy Implementation and Evaluation STRATEGY IMPLEMENTATION

From planning the work to working the plan, strategic thought to action

Execution of Strategy Identify short term objective Initiate specific functional tactics Outsource non essential functions Communicate policies that empower people in the organization Design effective rewards Short Term Objectives Operationalize long term objectives Discussion on short term objective raise issues which need coordination These help in identifying measurable outcomes of action plans or functional activities. These can be used as feedback to evaluate the strategy

Qualities of Short Term Objectives Measurable. What to be accomplished, how to be accomplished and when to be accomplished. Line activities are more easily measures than staff outcome. Priorities. Through discussion and negotiation, prudent to assign weightage Linked to long term objectives. Need to seen as cascading effect. Functional Tactics Detailed statement of means or activities that will be used by the company to achieve short term objectives and establish competitive advantage These are under taken in functional areas marketing, finance, production, R&D and HR Every value chain activity executes functional tactics Out Sourcing Acquiring an activity or service or product necessary to provide a companys product or services from outside the people or operations controlled by the acquiring company Initially out sourcing seen as cost cutting activity. Modern trend- outsourcing to gain and sustain competitive advantage Out Sourcing- Pit Falls Loss of control and reliance on outsiders Can create future competitors Skills important to product or service is lost Can cause negative impact on public and investor Crafting good legal documents especially for services is difficult Can get involved in long term contract that may become costly At times suppliers under bid. This affects the quality. This can lead to increasingly fragmented work culture where low paid workers get the work done with little initiative, enthusiasm.

Policies: to Empower People Empowerment. The act of allowing an individual or team the right and flexibility to make decisions and initiate action Policies. Broad precedent setting decisions that guide or substitute for repetitive or time sensitive managerial decision making Creating Policies that Empower Indirect control over independent action Uniform handling of similar activities Quicker decision in standardized situation Institutionalize basic aspects of institutionalized behaviour Reduce uncertainties in repetitive activities Counteract resistance to or rejection of chosen strategies by organization members Offer predetermined answer to routine problems Afford managers a mechanism for avoiding hasty and ill conceived decisions in changing operations Reward Stock Options Restricted Stock Plans Golden Handcuff Golden Parachute Cash Based on internal business performance using financial measures

What Matters Most to Strategy Execution 1. Information. Important information about competitive environment flows quickly to corporate Headquarters 2. Decision Rights. Every one knows which decision and action an employee is responsible for 3. Motivators. Even in an over all weak performance of the company the good divisions get the bonus, besides pay other incentives, career advancement linked with performance 4. Structure. Reporting channels, promotions can be lateral, fast track employees can expect
promotions more frequently than every three years

STRATEGY IMPLEMENTATION Formulation Vs Implementation FORMULATION IMPLEMENTATION Positioning of Forces > Managing of Forces Effectiveness > Efficiency Intellectual Process > Operational Process Intuitive, Analytical Skills Motivational and Leadership Skills Coordination among many Coordination among few Same tools small and large org Diff tools small & large org

Management Perspective of Strategy Implementation AS in the case of strategy formulation here also participative culture and shared view are important . Managers at the lower levels should be involved in the process of strategy implementation 1. Annual Objectives Annual objectives should be clearly stated and should be in tune with the organization culture. These objectives differ as per the hierarchy of the organization. These act as Guidelines for actions, channelizing efforts standard of performance Source of Motivation and identification Provide basis for organization designs 2. POLICIES Refer to specific guidelines, methods, procedures, rules, forms and administrative practices established to support and encourage work towards stated goals. Set boundaries, constraints and limits on the kinds of administrative action which can be taken to reward and sanction behavior What can and cannot be done Who can do Expectation from the Employees Delegation of decision making. 3. RESOURCE ALLOCATION This is based on the priorities established in the annual objectives. The resources includes Physical Human Financial Technological 4. MANAGING CONFLICT Avoidance: Ignore Diffusion: Play down differences high light positive Confrontation: Exchange members of conflicting partners Matching Structure and Strategy Dictates how objectives and policies will be established Dictates resources allocation Various types of structure are: Divisional Structure SBU Matrix Structure

Restructuring, Re- Engineering and Engineering Restructuring Down Sizing Right Sizing Delayering Primarily involves reducing the number of employees, number of division or units and number of hierarchical levels in an organizational. Intended to improve efficiency and effectiveness. Done to cater for share holders interest. Re-Engineering The process of re-engineering primarily focuses on break8ing the stero-types beurocartic culture which sets in almost all the companies over-time. The focus of employees becomes functions and departments rather than process, products and outputs. Corner stone of re-engineering and decentralization, delegation, reciprocal interdependence and information sharing.

In fact the modern trend in re-engineering is not only to dismantle the internal walls and barriers but to dismantle the external walls and barriers. This opens the way for interaction with other firms. For employees and customer will being. Process related management, redesign or innovation . Characterized by many short term tactical business function specific decision. Six sigma is one of the re-engineering techniques.

Linking Performance and Pay to Strategies Need to be based on long term and short term objectives. 75% on short term annual objectives and 25% on long term plan. To be Constructive Bonus, profit sharing end pay hikes. The appraisal system should give genuine feedback and should differentiate performances. MANAGING RESISTANCE TO CHANGE Natural thoughts on change are based on: Insecurity Financial Loss Uncertainty The three ways to implement changes: Forced change Educative changes Rational or self interest change MANAGING NATURAL ENVIRONMENT This involves treating the earth and environment as stake holder. Companies need to formulate green business strategy. Primarily involves energy conservation, prevention/minimization of pollution as also preventing other damages to the environment. STRATEGY SUPPORTIVE CULTURE Elements to link culture with strategy: Formal statement: Philosophy, charter, creeds, recruitment and selection and socialization. Designing of physical places, facades and buildings. Role modeling, teaching, and Coaching by leaders. Rewards and promotions. Legends, myths, parable about key people and events Leaders focus, measures and controls Leaders reaction to crisis. Systems and procedures Organizational design and structure. PRODUCTION CONCERNS Strategy implementation aspects depend to a large extent on the production related issues. Plant size, location, product design, choice of equipment, kind of tooling, size of inventory, inventory and quality control use of standards , job specifications, employees training, equipment and resources utilization , technology innovation, supply-chain. JIT Concepts For high technology firms flexibility is more important because major product designs changes may be needed.

HRM ISSUES The issues that arise from implementation of strategies pertaining to HRM are: Disruption of social and political structure Failure to match individual aptitude with implementation of tasks. Inadequate top management support for implementations activities. The best way to overcome these problems is to generate a shared view of the strategy to be implemented. As many managers as possible strategy is to be implemented. ESOPS Balancing Work life and Home Life. A Diverse Workforce: There is growing trends for diverse workforce. Some of the benefits of having diverse workforce are: Improve corporate Culture Employee Morale Higher Retention Easier Recruitments Increases creativity Decision inter personal conflicts Improve Client relations Increases productivity Maximizes brand identity Reduces Training Cost.

Marketing Issues Marketing decisions that may require policies for implementation are: Distribution Channels , multiple or exclusive dealership TV advertisement, heavy , light or nil. Share of business with single customer? To be a price leader or price follower Complete or limited warranty Mode of reward to sales persons VARIABLE FOR STRATEGY IMPLEMENTATION Market segmentation. Subdividing the market in to distinct subsets of customers of customers according to needs and buying habits. Product Positioning. This involves identifying schematic representation of how the product fares in relation to that of the competitors SEGMENTATION Geographic. Region, province size, city size, density, climate Demographic. Age, gender, family size, income, occupation, education, religion, nationality. Psychographic. Social class, personality. Behavioral. Use occasion, benefits sought, user status, usage rate, loyalty status, readiness state, attitude towards product PRODUCT POSITIONING Select key criterion that effectively differentiate product or services in the industry. Plot a two dimensional product positioning map. Plot products of major competitors on the map. Identify areas where the company products or services can be most competitive Develop a marketing plan accordingly Look for vacant niche Do not position between segments Do not serve two segments with same strategy Do not position in the middle of the map

FINANCE AND ACCOUNTING ISSUES Raising capital through Short term or long term debt Preferred or common stock Lease or buy fixed assets Determine appropriate dividend payout ratio Extension in time of account receivable Percentage discount on accounts with specified period of time The decision to acquire capital through debt or equity as also the mix of debt and equity depends on analysis Earning per share and earnings before interest and tax. The strategic decision to adopt common stock, debt or mixed option depends generally on highest EPS value under each event recession, normal or boom condition.

PROJECTED FINANCIAL STATEMENT Forecast sale. Need to be accurate and realistic Identify cost of goods sold. Generally calculated as percentage of sales. Net Income. Deducting selling expenses, administrative expenses from the margin.
Retained Earning. By subtracting dividends from the net income

RESEARCH AND DEVELOPMENT ISSUES Emphasis on product or process improvement Stress on basic or applied research Be leaders or followers of niche technology Develop automated or manual processes Spend high, average or low amount on R &D. In house or out sourced R&D. R&D MARKET CONDITIONS AND EXTERNAL ENVIRONMENT In house R&D Slow technical progress Moderate market growth Significant barrier to new products No major effort in R&D Rapid technology change Slow market growth Outsource R&D Slow technology change Rapid market growth Acquisition and merger Rapid technology growth Rapid market growth The three main approaches to R&D are Be market leader Imitate Mass production at low cost MIS Gather Information. Sources and their tasking Assimilate. Screen the relevant Evaluate. Information in to intelligence. Help in decision making Decide. Choosing the course of action, strategy The benefits of MIS are Flexi timings Possibility of working from home.

The Level 5 Leadership The level 5 leadership is at the apex of hierarchy of capabilities- is a necessary requirement for transforming an organization from good to great. The progress from level 1 to 5 need not be sequential Level 1. Highly capable individual. Makes productive contributions through talent, knowledge, skills and good work habits Level 2. Contributing team member. Contribute to achievement of group objectives, works effectively with others in a group setting Level 3. Competent Manager. Organizes people and resources towards effective and efficient pursuit of predetermined objectives Level 4. Effective Leader Catalyzes commitment to vigorous pursuit of a clear and compelling vision. Stimulates the group to high performance standards Level 5. Executive. Builds enduring greatness through a paradoxical combination of personal humility and professional will. They take their companies to greatness and keep them there Leadership and Strategy Implementation Is primarily for coping with change. In modern environment changes of all kinds occur very rapidly. Hence the importance of leaders. Organizational leadership- is the process by key executives of guiding people in the organization towards achieving the vision Leadership principle is based on the moral compass- honesty, integrity, ethical behavior. Leadership Leaders must build organization Ensuring common understanding about organizational understanding Clarifying responsibilities among managers and organizational units Empowering newer managers and pushing authority lower down the chain Facilitate coordination and communication Gaining personal commitment Remain closely connected to the internal and external environment Leadership: Emotional Intelligence Self awareness Self management Social awareness Social skills Leadership: Sources of Power Position. Decision making, due to structure Reward. In return of desired outcome. Information. Access and control Punitive power. Coercion and fear of punishment Expert influence. Knowledge and expertise Referent influence. Desire to be identified Peer influence. Assignments to teams and groups

STRATEGY EVALUATION Examine underlying bases of a firms strategy Compare expected results with actual results Taking corrective action to ensure that performance conforms to plan WHY STRATEGY EVALUATION IS DIFFICULT Increase in environments complexity Difficulty in predicting the future Increasing number of variable Rapid rate of obsolescence Domestic and world events affecting the organization Decreasing time span for which planning can be done with any accuracy EVALUATION OF STRATEGY------RUMELTS CRITERIA Consistency. With goals and policies Consonance. Adaptive response to external environment Feasibility. Not to overtax available resources , not create unsolvable sub-problems Advantage. Create and sustain competitive advantage

Consistency Problems continue despite changes in personnel, these are issue based rather than people based Success of one department is taken as failure of another department If problem and issues continue to be brought to the top for resolution Consonance Needs for examining sets of trends as well as individual trends Strategy needs to represent an adaptive response to external environment and critical changes occurring within There are a series of interdependent factors that bring about waves of change Feasibility Neither overtax available resources nor leave unsolvable sub problems Most easily the financial resources can be checked. Need for innovative uses of resources ( leveraging) must need to be remembered Advantage Competitive advantage based on Resources Skills Position Once gained the position is defensible For sustaining positional advantages internal factors need to remain the same Position also related to size